Finding opportunity in volatility, with GE Vernova CEO Scott Strazik

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1:22We're not going to suck our thumbs and cry on our beard as things kind of change. You know, we want to use change as an opportunity to improve. Now, tariffs can create cost challenges. We're not immune to that, certainly in the near term. But again, is that something that we're going to be stuck in the mud over? You know, even in the last five days, there's some learnings that we'll be able to use to our benefit from here.

2:00That's Scott Strazik, CEO of GE Vernova, the energy arm of GE that spun out as its own company a year ago. Scott was initially a guest on this show last year, and I wanted to talk with him again to hear how he's managing amid the Trump administration's tariffs and the rejuggling of global trade. GE Vranova had a tremendous 2024 among the top performing stocks for the year, but Scott knows he needs to look forward, not back. We dig into real-time adjustments and steadfast convictions, including how the shifting conversation on climate change hits his planning. His perspective on leadership and on our evolving energy needs is instructive, So let's get to it.

2:46I'm Bob Safian, and this is Rapid Response.

2:53I'm Bob Safian. I'm here with Scott Strazik, CEO of global energy company GE Vernova. Scott, welcome back to the show. Bob, thanks for having me. I appreciate the opportunity to connect with you today. Yeah. So GE Vernova is now one year into life as an independent public company, Much to celebrate. Your revenue rose to$35 billion in 2024. G.E. Vinova was the year's fourth best performing stock. Again, a lot to celebrate. But in 2025, the external environment hasn't been as friendly. The Trump tariffs have everyone scrambling. How do you think about this moment? How do you think about it compared to a year ago at this time?

3:35Well, you know, our end markets really haven't changed very much, Bob. I would start there. I mean, we continue to see very strong end markets in our larger core businesses and gas power and our electrification and grid businesses. So, frankly, you know, there's going to be moments of dislocation between the stock market and our end markets. It doesn't mean that, depending on where the tariffs go, that doesn't create an opportunity for us to prove out our nimbleness in managing our global supply chain. And we're going to have to do that. But I think it's, frankly, an opportunity for us to demonstrate how much we've grown in our first year as a public company to be able to operate in this kind of environment.

4:18So you mentioned the agility that you have, and it's going to be under test, I guess, with sort of the tariffs. How do the tariffs practically impact your business? I mean, you're a global business, so changes in global relationships and reputation, all of that requires some adjustment. Yeah, I think even if you take a step back and think about some of the stuff I've talked to our investors about on where we want to make investments, we want to invest in our business where we can improve the durability or the resiliency of our supply chain. And that's simply because we have a lot of organic growth that's coming in our businesses, irrespective of any policy changes.

5:06Now, policies are going to change. They're going to evolve. This is going to force us to relook at where we source certain things. It'll force us to revisit our terms with some of our suppliers in different locations. But we know how to do that. So we don't want to be too fast to respond as we're kind of trying to make sense of everything. But I'd also rather be a company that is quick on its feet in this environment. President Trump announced the tariffs on a Wednesday afternoon after the market closed. Rest assured, by Friday afternoon, our teams were actively working evaluation plans of what our alternatives are.

5:48Now, it doesn't mean within 48 hours you pull the trigger in a dynamic period of time. So we're working it pretty hard right now to figure out what our alternatives are. And with a growing backlog, to the extent our backlog is growing so substantially, that also puts us in a privileged position with our supply base to come and say, listen, this is what it's going to take to keep serving GE Vernova. It's almost like there's been a pullback around the very idea of globalization, that like maybe it's not good to be a global organization. Do you think about that? Well, when I think about my first four months of the year, I mean, my first trip of the year was to Singapore and Japan the first week of January.

6:36I had a great trip in the Middle East in February visiting Saudi, Qatar, Dubai, Abu Dhabi. These are all important markets for us. You know, I think we've got opportunities to serve these markets throughout, and we're going to work really hard to earn those opportunities. At the same time, long before the announcements with tariffs, the reality is there has been an evolving shift with globalization. There's certainly been a lot of strategic moves towards concepts of decoupling from the Chinese supply chain explicitly. So we've been working that over a long period of time. Now, the last week certainly has been broader than any one country.

7:22And with it, it forces you to really revisit in an even more intimate way what you do and where you do it. But we can do that. We're capable of taking that on. And I'm highly confident we can use this moment to make ourselves a better company for the long term. You recently launched the company's first global ad campaign, the Energy of Change, around this idea that it's a time of opportunity in the energy sector. Why that messaging now? Does that change at all, given the tariffs, or that remains as strong as it ever was? I think even more so. This is very much about bringing a new energy to the energy transition.

8:03And the reality is when it comes to climate change, as an example, there's a lot of people that go at that conversation with a somber, negative, pessimistic tone that we reject inside GE Vernovo. Think about the hyperscalers as an example that care deeply about sustainability. They need more electricity. They're going to help us move decarbonization technologies left, like nuclear, like carbon capture that otherwise wouldn't be there. I would make that same argument, although it may not have been the intent of our first global campaign, that we're trying to bring the right energy to this conversation of globalization too.

8:45So you think about India, most populated country in the world today. It's still getting 80 % of its electricity from coal. That's an incredible opportunity for us to serve that market. I was in Saudi in February. They're still getting 40 % of their electricity from oil. They want to get to 50 % gas, 50 % renewables by 2030. We can serve that market. So I think there's real opportunities for us to accomplish substantive things. in the near term, both on decarbonization, but being a leading global company. I mean, you and I were on stage together at the Climate Tech conference last June, and you talked some about your vision of sort of modernizing the U.S.

9:29energy system, energy elsewhere. Climate change seems to be a topic that's kind of less in vogue, maybe, right now than it was then. Does that shift your priorities, your plans, or no, you're still committed. That is a priority for you. When we talk about sustainability, we very much talk about it in the context of electrification and then decarbonization. And in that vein, it's how do we add more electrons to the world every day while making the average carbon intensity of those electrons cleaner. That's been our guiding true north for over a year. It remains our true north. We do think it's very important that we add the electrons, but we see a lot of ways to decarbonize them as we go.

10:20So I think we remain just as committed today as we were yesterday. And no, I don't see that really changing for us. And when it comes to, say, like wind energy, G. Vrnova supplied half the turbines for the largest wind farm project in the Western Hemisphere, Sunsia's$5 billion project in New Mexico. President Trump has sort of bashed wind turbines as eyesores that harm wildlife. Like, does that sort of government, I don't know, resistance impact where you deploy your efforts as a business? Well, I was in Pensacola, Florida last week, which is one of the locations where we make our nacelles for the wind turbines where all of the electrical equipment and generators are stored at the top of the wind turbine.

11:09And this is a facility we've been continuing to invest in. And it's about 700 employees, about 20 % are veterans. We're excited about where we're going with wind. If I give you an example of something that from an innovation perspective that's really changed in the last year, we're at a point now with our wind blade technology that every blade we manufacture, we use a crawler that crawls through the inside of the blade and takes visual images that we're now leveraging with artificial intelligence to strengthen the quality of our blade manufacturing process. I use that example to just say, we're in this business and we're investing into it.

11:53Now, at the moment, truth be told, our North America wind orders are soft. We expect them to be soft the first half of the year as our end customers get more clarity on U.S. policy as it relates to wind. But we see a role for wind to play, and we're going to be very well positioned to serve that market. You mentioned the use of AI in your wind blades. And, you know, AI requires a lot of energy. G. Vernover, in some ways, has almost been swept up in some of the AI enthusiasm, almost AI adjacent, right? Yes. Do you worry about, like, an AI bubble or what happens in that industry impacting you? Well, I think the AI demand cycle is still a small proportion of our overall end markets.

12:42So there's a lot else going on here. You have just the development of re-industrialization in the U.S. with manufacturing. For a long time, as we were driving the most efficient global supply chain, that may have been weighing down electric load growth in places like North America and Western Europe and driving more load growth in China with coal, as an example. As some of that decoupling takes place, it requires more supply chain growth in more locations, and those need electrons. There's a lot of reasons why we're going into a period of time here that we see electric demand growth being substantial.

13:27I analogize that back towards, in the case of the U.S. and Western Europe, more like after World War II. 1945 is the right baseline comparison point on how much more electricity is going to be needed. AI is part of that, but it's one of many drivers. If there is an influx of more manufacturing in the U.S., which obviously the administration wants, all of that manufacturing requires energy to be able to operate. And that is opportunity and growth for you because the system needs more capacity. Exactly. You have announced investing$600 million in U.S. factories yourself, creating over 1 ,500 jobs.

14:10Yes. How much does GE Vernova need to be an American company? I would say more we need to be a local company for our local markets. I think in your bigger markets, you're going to have a local supply chain to serve that market, local teams to serve that market. We're a global company where at this moment, one of our most important local markets certainly is the U.S., and that's why we're investing into that market. But we're not going to not invest in some of these other countries that are attractive end markets, too, to be local there. There have been some speculation that the speed with which U.S.

14:55manufacturing can ramp up to replace things that might have come from abroad, that that's going to take a while and there's going to be disruption. Is that something for your business that you see, that you worry about? Or is that part of the nimbleness, I guess, that you're talking about on the part of your team? We do have a fair amount of industrial footprint in the U.S. that allows us to build on existing assets. So the$600 million investment is reinvesting in existing assets, 1 ,500 jobs to locations that already have the concrete poured. They already have the cranes. They already have the logistics with the railroad adjacent to the factory.

15:39So we can move reasonably quickly. Now, to the extent the policy environment drives us towards greenfield investments to re-industrialize parts of our supply chain, that would take longer, truth be told. And that's a multi-year journey that at this point, we aren't necessarily evaluating, but we will keep looking in that regard. But first and foremost, we're going to keep trying to eliminate waste in our existing processes and build upon the assets we have. And we feel like that can carry us for a period of time. Now, where we don't have it, as an example, we announced and closed an acquisition of a supply chain footprint from Woodward.

16:23That was a vertical supply chain integration of a small part of Woodward's business, but for our gas business, an important part of our supply chain where we thought it made more sense to just have that internal. How much do you tune your sort of long-term decision-making when there's, you know, noise and change and pressure in the near term? We need to scrutinize how long the status quo is the status quo, for sure. And that can be hard to do in a volatile moment that we're in. But if nothing else, it gives us a chance to really challenge ourselves on what we have been doing, whether there's a different way to do it.

17:04And that's the way we talk about it internally is this is an opportunity for us to really revisit past assumptions and think about how we can be better. Now, in some cases, we may gain conviction with exactly the play we've been running. In others, there may be a better alternative. I mean, do you have sort of, I don't know, leadership principles or lessons that you use as a touchstone when things do get volatile? Well, we're not going to suck our thumbs and cry on our beer as things kind of change. You know, we want to use change as an opportunity to improve. In that regard, this moment when we're just reaching our one-year anniversary as a public company is a moment when I feel pretty confident we've got our feet on the ground.

17:54And we can play into this and use this moment of change to play offense on not just how we want 2025 to go because we won't change 2025 in any material way, certainly from a supply chain strategy, but we can use 2025 to challenge ourselves for the next decade. And that's very much what we're doing. Scott is somehow both steady and fiery. He's looking for opportunity at a moment when many other CEOs are paralyzed by uncertainty. So how does he avoid falling into the uncertainty trap? We'll talk about that after the break. Stay with us.

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19:30And here's the best part. Join AWS Activate today and you could score up to$100 ,000 in AWS credits tailored to your stage and network. Go to aws.amazon.com slash activate and start building. Expanding your business in the US can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth. That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one.

20:14So if you're scaling, make it simple with Deal. Go to deel.com slash M-O-S and get up to three months free. Before the break, GE Vernova's Scott Strasik explained how he's looking for opportunity amid the tariff war. Now he explains how he stays optimistic in the face of challenges, plus talks about nuclear power growth, GE Vernova's new alliance with MIT, and more. Let's jump back in. I wanted to ask you about nuclear power. Yes. You know, the tech sector has been part of a revival of interest in nuclear power. Has investment been as robust as sort of the news cycle about it? Well, the conversation is accelerating.

21:02I would say there's urgent diligence happening with the end customers. The spending, we're early in that phase. So what you're seeing is spend on trying to get incremental megawatts out of existing plants. we've got an ability to what we call uprate existing plants this decade and that that's starting to move. But I would say a new build, we're just in urgent diligence. So the spend isn't happening yet. We're helping the end customers, we're helping the administration understand how we move this industry to the left and get innovation cut in by early in the next decade. We're in construction on our first small modular reactor in Canada right now.

21:51We actually received the license to construct last Friday in Ontario. And now the goal is how do we get that license to construct in the United States as quickly as possible so we can get building some here? And how much of the, I don't know, the delay or the slowness of the commitment is about sort of past nuclear power concerns and disasters impacting the choice and progress? Or is it more about cost? Yeah, I would say infrastructure doesn't get built on style points. It's ultimately economics. And this is, we're going to be early in the serial number build out. And that's the economics to build a small modular reactor.

22:34But for the end customers, their business case is very dependent on when the electrons can show up. How quickly can the NRC, the regulatory body in the U.S., provide a license to construct? How quickly will it be able to provide a license to operate the plant? We're getting closer and closer to a tipping point where a number of these projects are going to go through the regulatory process, and we're going to be building them here the second half of this decade. By early into the next decade, a number of these will be creating clean electrons in the U.S. You mentioned the regulatory agency. Lots of businesses that work with the U.S.

23:16government are uneasy about, you know, crimping that relationship. I know we've seen big law firms preemptively make deals with the administration. How much do you worry about that? How much do you focus on what your relationship is with the administration and the government? Well, I can tell you certainly on our end, as an example, Secretary Wright, Department of Energy, Secretary Burgum with the Interior have been very accessible to myself and my team as we've been iterating on how we serve them in this administration. So I'm encouraged that we can work through these things and that we'll accomplish that.

23:56Your headquarters are based in Cambridge, Massachusetts, something we talked about, in part because you wanted to be near the universities in the area. Many of those universities now face a pullback or potential pullback in federal funding for research. GE Vernova recently launched a partnership with MIT. You committed, I think,$50 million. Is that partnership an effort to fill that funding gap? We've been talking with MIT for the better part of 18 months on this alliance. Having spent a lot of time on the campus myself, it's walking distance a couple blocks away, there's an incredible amount of both technical and policy enthusiasm on how to practically move the needle on technology that can electrify and decarbonize the world.

24:44So we're pretty excited about this. We're going to have about 12 research projects every year we're going to work on where we're going to match master's and PhD students with our PhD researchers at our Advanced Research Center and to work on projects together. We're going to pick three policy topics every year that we want to work on and bring our teams together to the GE, Vernova, MIT think tank to kind of put positions in the ground on how we can help governments think about policy. We're going to hire a lot of interns during the summer and bring them into the mix of GE Vernova. So I'm really excited about the MIT Alliance.

25:30And I think it's one of many things we'll do. I mean, when you think about the number of STEM graduates we need in the U.S. to meet this growth we've talked about and re-industrialized in the U.S., we'll also look for opportunities to be involved in STEM programs throughout the country, maybe more community college-oriented in different ways, close to some of our epicenters of our larger factories. So MIT is a start, but we're going to keep investing in this space generally because we feel like we can play an important role in this ecosystem. The funding cutbacks have hurt a lot of research projects.

26:13Do you feel like there's more of an opportunity, obligation as a business person to sort of fill those gaps? I mean, it's obviously, it's not all going to be you filling the gap of all the money that the government was putting towards these things, but it does potentially slow some of the research that, you know, is valuable for you? China graduates three and a half million STEM graduates every year. That's about as many graduates as we graduate across all disciplines every year. So this is important. You know, we need to keep investing in science, technology, math, engineering. Some of that's undergrad.

26:56Some of that can be community college. Some of it can be PhD level stuff, which is a little bit more oriented towards the MIT alliance, we're going to be involved in all the above. And we do that because we want the communities that we're in, MIT as a neighbor to thrive, but we do it because we think it's good business. We're only going to grow our company and serve these markets with the best team in the world. And to do that, you got to invest in people. And sometimes the best way to get the people is to be part of an ecosystem that allows them to get to know you and to iterate together. And that's what we're all about.

27:37Jeeva Nova has, what, 75 ,000 employees all over the world. What will you say to them about this moment for the company, this moment given this economic global war that's kind of going on? How do you calm them, give them perspective? Well, we've been talking about this moment as an investment super cycle into the electric grid for the better part of 18 months now. And there's nothing in the headlines that give me any less conviction in the market opportunity presenting itself. More electrons are going to be needed, especially in a decoupled supply chain where there's going to be more redundancy maybe built into the global supply chain because of policy.

28:27So our opportunity to serve these markets is as strong as ever. Now, tariffs can create cost challenges. We're not immune to that certainly in the near term. But again, is that something that we're going to be stuck in the mud over? or are we going to act on it? And at least challenge ourselves every day and use this moment to become a better company. We've had a good first year as a public company, but it's just the beginning. And we have to use this moment to challenge ourselves to be that much better a company. And that's what our expectation is. And that's the way I talk to our teams today.